Get Times news on your mobile - text Times to 87700

The timing could hardly be worse. Mobile phone operators have spent billions of pounds rolling out 3G services for comparatively little return; now, amid a financial downturn and at the onset of a global recession, they are gearing up to do it all again.

Until recently so-called 4G, which promises mobile broadband speeds that far outstrip even fixed-line broadband levels, seemed a comfortable four or even five years down the line. But not any more: Ofcom, the telecoms regulator, plans to auction 4G spectrum next year, forcing operators to commit to the new technology; worse, T-Mobile, the German group owned by Deutsche Telekom, has upped the ante and become the first operator to run trials of 4G LTE (long-term evolution), one of two competing technologies.

A recent trial, together with Nortel, the telecoms equipment maker, carried out under everyday conditions near T-Mobile's headquarters in Bonn, produced download speeds of 30 megabits per second - more than three times the speeds of most existing fixed-line broadband connections.

At full capacity LTE promises eventual download speeds of 170 mbps. T-Mobile says that it could start to roll out 4G as early as 2010. Its rivals can hardly afford to stand by and allow it to steam ahead, unchallenged.

The success of devices such as the iPhone and 3G-connected laptops, and of web video services such as YouTube and BBC iPlayer, has led to growth in data traffic. Moreover, mobile broadband use is expected to increase, threatening to overload the networks.

Mobile groups, such as Orange in Britain, are spending tens of millions to speed up their 3G networks, determined to squeeze as much of a return out of the £22.5 billion that operators paid in 2000 for a share in the spectrum. T-Mobile, on the other hand, looks set to jump straight to 4G, which will transmit far greater amounts of data at more than 20 times present speeds.

Joachim Horn, chief technology officer of T-Mobile International, says that 4G is necessary because, while mobile data traffic has increased 13 times, data revenues have increased only 1.5 times. “We are not able to deliver the speed and consumer experience for the applications coming out,” he said. “We need to accommodate higher use at a lower price. With LTE we can increase traffic without increasing the cost.”

A battle between two rival 4G mobile broadband technologies - LTE and Wimax - adds a further dilemma for operators. Like video's VHS-Betamax battle, the service with the most backers is likely to win. Only AT&T and Verizon, the American operators, have backed LTE, but 18 operators, representing 85 per cent of global mobile phone subscribers, have joined the Next Generation Mobile Network Association, which promotes LTE.

Sprint Nextel, the American operator, and Clearwire, the wireless broadband provider, have joined forces to create a national US Wimax network, backed by more than $3 billion in funding from groups including Google, Intel, Comcast and Time Warner.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax